UPDATE March 14, 2010 - The new Government regulations take effect April 5, 2010 HAMP- Home Affordable Modification Program HAFA-Home Affordable Modification Program HARP-The Home Affordable Refinance Program HSA-Fannie Mae has another option for homeowners who are facing foreclosure.
HomeSaverAdvance (HSA) was developed for homeowners who are at least two months late on their mortgage payments and are financially ready to begin making current payments again but cannot handle a standard repayment plan right away.
IT IS IMPERATIVE THAT HOMEOWNERS CONTACT THEIR LENDER RIGHT AWAY TO DISCUSS ANY AND ALL OF THE OPTIONS ABOVE BEFORE MAKING ANY DECISIONS.
-UPDATED 3-14-2010 _______________________________________________ I can only speak in regards to California.
Each state has their own peculiarities.
First of all lets talk about purchase offer loans vs refi's and helocs (Home Equity Loans).
The Bush mortgage debt relief act refers to Original Purchase loans.
Those loans used entirely for the purchase of a home.
California followed suit but their program ended 12/31/2008.
It is unclear if California will re instate for 2009 and 2010.
Unless a refi and heloc was used to better the original purchase loan and/or any equity pulled out was used entirely for capital improvement of the home, will not follow under the Bush Mortgage Debt Relief Act.
It is those loans that do not fall under the Bush Mortgage Debt Relief act that will reap the benefit of a short sale in most cases.
A short sale will be the homeowners opportunity to reduce the amount of liability and penalties and taxes vs a foreclosure.
Both a short sale and foreclosure will have a negative effect on a homeowners credit rating.
What really knocks down ones credit ratings is the NUMBER of missed payments.
A couple of missed payments is one thing.
6-12 is another whole ballgame.
No two cases are alike.
What may be right for one person or family may not be right for the other.
Before considering a short sale or foreclosure PLEASE speak with a CPA and/or Real Estate Tax Attorney.
In many cases whether a short sale and/or foreclosure,a bankruptcy may follow.
This is where you need legal guidance and the expertise of a CPA knowledgeable about the current market and short sales and foreclosures.
Generally speaking a short sale will allow a homeowner to repurchase again within a about two years as long as the rest of their debt has been paid in a timely fashion with no delinquencies etc.
In actuality even a foreclosure you would still be able to purchase again in 3-5 years but at a much higher interest rate.
Plus with a foreclosure, any application you fill out including job interviews typically ask you have had a recent foreclosure or bankruptcy.
Usually will ding your credit scores heavily.
When there is two loans involved only one foreclosures the other usually releases the lien following a small compensation from the First Lender to allow the short sale to take place but the 2nd will usually retain the right to come back after judgment.
If the lender does come back after judgment they may try to garnish your wages and/or take you to court to collect, then a bankruptcy may be in the making to allow those judgments to be included in the bankruptcy.
Timing is important, legal counsel is extremely important.
Many of the lenders are threatening to come back after judgment.
Will they? Can They? Do they have the resources? It is a gamble and one that needs to be thoroughly thought through before making any final decisions.
A Realtor or Real Estate Broker are not licensed nor hired to determine if a short sale or bankruptcy would be in your best interest.
Nor should a Realtor or Broker try to tell you so.
We have had clients who wanted to do a short sale and we were concerned whether it was the best option for them and our clients finally touched base with a Real Estate Attorney and found out a foreclosure would actually be in their best interests followed with a bankruptcy.
In retrospect we have had clients who originally were going to foreclose only to learn that a short sale would be in their best interest.
Not all foreclosures will require a bankruptcy.
The bottom line is this a very complicated process.
There are the gurus who promise salvation to the homeowners in distress.
If you get anything from this blog please hear this "IF IT SOUNDS TOO GOOD TO BE TRUE, IT IS.
" There are sharks and more sharks out there taking advantage of anyone they can.
Before Considering a short sale or foreclosure contact your lenders loan modification dept.
Sometimes it will take several try's to find someone competent.
You just might be able to defer payments for a few years until you have had time to catch up and/or reduce your monthly mortgage payment for a period of time.
Usually they will put the additional cost of such on the back end of your loan and either extend the loan term and/or set up an additional separate payment schedule after a period of time.
Your lender may tell you there is nothing else to be done but a short sale.
At least you know you tried.
If you live in Contra Costa and Alameda Counties, contact us to speak further.
We can refer you out to real estate attorneys and/or CPA's if you do not have one.
HomeSaverAdvance (HSA) was developed for homeowners who are at least two months late on their mortgage payments and are financially ready to begin making current payments again but cannot handle a standard repayment plan right away.
IT IS IMPERATIVE THAT HOMEOWNERS CONTACT THEIR LENDER RIGHT AWAY TO DISCUSS ANY AND ALL OF THE OPTIONS ABOVE BEFORE MAKING ANY DECISIONS.
-UPDATED 3-14-2010 _______________________________________________ I can only speak in regards to California.
Each state has their own peculiarities.
First of all lets talk about purchase offer loans vs refi's and helocs (Home Equity Loans).
The Bush mortgage debt relief act refers to Original Purchase loans.
Those loans used entirely for the purchase of a home.
California followed suit but their program ended 12/31/2008.
It is unclear if California will re instate for 2009 and 2010.
Unless a refi and heloc was used to better the original purchase loan and/or any equity pulled out was used entirely for capital improvement of the home, will not follow under the Bush Mortgage Debt Relief Act.
It is those loans that do not fall under the Bush Mortgage Debt Relief act that will reap the benefit of a short sale in most cases.
A short sale will be the homeowners opportunity to reduce the amount of liability and penalties and taxes vs a foreclosure.
Both a short sale and foreclosure will have a negative effect on a homeowners credit rating.
What really knocks down ones credit ratings is the NUMBER of missed payments.
A couple of missed payments is one thing.
6-12 is another whole ballgame.
No two cases are alike.
What may be right for one person or family may not be right for the other.
Before considering a short sale or foreclosure PLEASE speak with a CPA and/or Real Estate Tax Attorney.
In many cases whether a short sale and/or foreclosure,a bankruptcy may follow.
This is where you need legal guidance and the expertise of a CPA knowledgeable about the current market and short sales and foreclosures.
Generally speaking a short sale will allow a homeowner to repurchase again within a about two years as long as the rest of their debt has been paid in a timely fashion with no delinquencies etc.
In actuality even a foreclosure you would still be able to purchase again in 3-5 years but at a much higher interest rate.
Plus with a foreclosure, any application you fill out including job interviews typically ask you have had a recent foreclosure or bankruptcy.
Usually will ding your credit scores heavily.
When there is two loans involved only one foreclosures the other usually releases the lien following a small compensation from the First Lender to allow the short sale to take place but the 2nd will usually retain the right to come back after judgment.
If the lender does come back after judgment they may try to garnish your wages and/or take you to court to collect, then a bankruptcy may be in the making to allow those judgments to be included in the bankruptcy.
Timing is important, legal counsel is extremely important.
Many of the lenders are threatening to come back after judgment.
Will they? Can They? Do they have the resources? It is a gamble and one that needs to be thoroughly thought through before making any final decisions.
A Realtor or Real Estate Broker are not licensed nor hired to determine if a short sale or bankruptcy would be in your best interest.
Nor should a Realtor or Broker try to tell you so.
We have had clients who wanted to do a short sale and we were concerned whether it was the best option for them and our clients finally touched base with a Real Estate Attorney and found out a foreclosure would actually be in their best interests followed with a bankruptcy.
In retrospect we have had clients who originally were going to foreclose only to learn that a short sale would be in their best interest.
Not all foreclosures will require a bankruptcy.
The bottom line is this a very complicated process.
There are the gurus who promise salvation to the homeowners in distress.
If you get anything from this blog please hear this "IF IT SOUNDS TOO GOOD TO BE TRUE, IT IS.
" There are sharks and more sharks out there taking advantage of anyone they can.
Before Considering a short sale or foreclosure contact your lenders loan modification dept.
Sometimes it will take several try's to find someone competent.
You just might be able to defer payments for a few years until you have had time to catch up and/or reduce your monthly mortgage payment for a period of time.
Usually they will put the additional cost of such on the back end of your loan and either extend the loan term and/or set up an additional separate payment schedule after a period of time.
Your lender may tell you there is nothing else to be done but a short sale.
At least you know you tried.
If you live in Contra Costa and Alameda Counties, contact us to speak further.
We can refer you out to real estate attorneys and/or CPA's if you do not have one.
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